* Wall St. slides on profit taking
* Product inventory build weighs
* Market eyes rockets fired on Israel
(Adds inventory detail in paragraph six, updates prices)
By Edward McAllister
NEW YORK, Sept 11 (Reuters) - U.S. crude oil fell over 3
percent to below $70 a barrel on Friday as U.S. equities
struggled for traction and raised fears about the economy and a
recovery in energy demand.
U.S. crude for October delivery <CLc1> fell $2.20 to $69.74
by 1:24 p.m. EDT (1724 GMT) after rising to $72.90 in choppy
trading. London Brent crude <LCOc1> fell $2.10 to $67.76 a
barrel.
"Crude put in a high for the week, but there was no
follow-through and the dollar and S&P turned around and that
helped pull crude back," said Gene McGillian, analyst at
Tradition Energy in Stamford, Connecticut.
U.S. stocks were hampered by profit taking after five days
of gains and the longest winning streak since November which
helped boost crude prices earlier in the week. []
Analysts and traders say that current oil prices reflect
attitudes in the market rather than fundamentals.
Data released Thursday by the U.S. government showed
petroleum product inventories, including heating oil and
gasoline, rose more than expected last week, suggesting
lackluster demand.
"Fuel demand has not recovered and the market needs to see
some demand after going up on sentiment," McGillian said.
Data showed China's crude oil imports in August surged
about 25 percent to a near-record high of 19.6 million tonnes
or around 4.6 million barrels. []
Oil hit a year-high of $75 a barrel in late August, from
below $33 in December, as global oil demand recovered.
Crude's climb mirrored a rise in European equities
<>, which were headed for their sixth consecutive session
of gains.
Since March 9, equities and oil have traded in close
correlation.
For a graphic see:
http://graphics.thomsonreuters.com/099/CMD_BRNT20909.gif
At least two rockets were fired from southern Lebanon into
northern Israel, prompting an Israeli artillery response,
heightening fears of regional instability and prompting earlier
crude buying, traders said. No casualties were reported.
[]
The International Energy Agency said that oil demand would
rise this year and next as the global economy recovers,
although it also said oil stocks in the big developed countries
of the OECD were up 4.6 percent in July versus a year ago.
[]
WEAK DOLLAR
The dollar index <.DXY>, a measure of the U.S. unit's
performance against six other major currencies, has dropped 1.9
percent in the past week. It briefly fell as low as 76.548 of
Friday, its lowest level since September 2008. []
Weakness in the dollar, the currency of the oil market, was
a concern for the Organization of the Petroleum Exporting
Countries. The group needs higher average oil prices to step up
investment in new output, its secretary-general said.
[]
The dollar's slide has helped boost demand for crude this
week, but an analyst at Commonwealth Bank said oil was unlikely
to get much more upward momentum from the greenback.
"Our forecast for currencies is for dollar depreciation --
a lot of that has occurred already and while depreciation has
been an upside driver, that influence may be weakening," said
David Moore, commodities strategist at Commonwealth Bank in
Sydney.
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Catherine Bosley in London, Nick Trevethan in Singapore;
editing by Jim Marshall)
